Interesting stock. Still think the problem is the markets view on Investment Trusts. This one really is just too small for institutional investors, so who is this targeted at?
It’s also fairly illiquid with 700k monthly turnover on its 55m mcap. Really would take much to narrow the discount relatively speaking.
I think the size and portfolio concentration makes it unlikely that the discount will narrow in any sustainable fashion. But the current discount gives us substantial margin for error for something going wrong with one of the two big bets, but this deal shows that one of those big bets is likely to come good. As long as capital is returned to shareholders as promised - tender offer please :) - this could provide a very nice yield, which cannot help but translate into capital gains as well.
Margin for error maybe, but that’s only if you see the current value at nav. If the nav falls surely the share price follows suit to a point. Returning capital to shareholders would be good but equally this is a small trust. The management fee is quite high at 1.75% door it to be of value to managers at its current size.
What I would ideally like to see, is the stamp duty removed from investment trusts, or reduced. This would make the UK more appealing. Second to this it should be mandatory that management fees, at least a portion is reinvested in trusts, with a vesting period.
The AMC should also be based on the lower of NAV or share price to fully align everyone’s interests.
The downside to trusts, is that when investors leave because they no longer believe in the strategy, then they don’t get the true value of their investment back. It’s easier to leave than vote the managers out.
Interesting stock. Still think the problem is the markets view on Investment Trusts. This one really is just too small for institutional investors, so who is this targeted at?
It’s also fairly illiquid with 700k monthly turnover on its 55m mcap. Really would take much to narrow the discount relatively speaking.
I think the size and portfolio concentration makes it unlikely that the discount will narrow in any sustainable fashion. But the current discount gives us substantial margin for error for something going wrong with one of the two big bets, but this deal shows that one of those big bets is likely to come good. As long as capital is returned to shareholders as promised - tender offer please :) - this could provide a very nice yield, which cannot help but translate into capital gains as well.
Margin for error maybe, but that’s only if you see the current value at nav. If the nav falls surely the share price follows suit to a point. Returning capital to shareholders would be good but equally this is a small trust. The management fee is quite high at 1.75% door it to be of value to managers at its current size.
What I would ideally like to see, is the stamp duty removed from investment trusts, or reduced. This would make the UK more appealing. Second to this it should be mandatory that management fees, at least a portion is reinvested in trusts, with a vesting period.
The AMC should also be based on the lower of NAV or share price to fully align everyone’s interests.
The downside to trusts, is that when investors leave because they no longer believe in the strategy, then they don’t get the true value of their investment back. It’s easier to leave than vote the managers out.